matthewmilner

One of the reason is: People are more likely to spend money when they have very little income. Think of all the people taking these houses they couldn't afford. Think of all these people signing up for credit cards they cannot pay off. Psychologically - Most people are more likely to spend when they feel depressed. AI i believe that people use credit cards to finance their "retail therapy" but i really doubt anybody got so depressed they went out and bought a house. also - when you say "think of all the people taking these houses they couldn't afford" - the vast majority of home owners in the US have traditional home financing: sub-prime ARM mortgages only account for a small percentage of home loans. the problem is that these same loans with super high default rates. out of all the people i know that own homes there's only ONE dude with an adjustable rate ARM - of course he's also the only person i know a month away from foreclosure. and if you're into placing blame with this whole mess it most definitely doesn't stop with the homeowners - don't forget the mortgage brokers - appraisers - lenders and regulators who approved loans for people they KNEW couldn't and wouldn't be able to pay for them. as the saying goes, "it takes 2 to tango" also - for full disclosure - my wife and are own a home and have a traditional 30 year fixed mortgage. we're self employed and the current economic state here in the US has dealt a HUGE blow to our business. we've been trying to sell our house for the last 18 months - lower our overhead and restructure - but no luck as of yet.